Beneficial Ownership Reporting

What is Beneficial Ownership Reporting?

Beneficial ownership information reporting requirements stem from the Corporate Transparency Act (CTA), part of the Anti-Money Laundering Act of 2020. While this legislation has been around for a few years, FinCEN, a bureau within the U.S. Treasury Department, recently issued a final rule establishing the beneficial ownership information reporting requirements, which take effect on January 1, 2024.

What is the timeframe for Beneficial Ownership Reporting?

Companies created or registered to do business before January 1, 2024, will have until January 1, 2025, to file their initial beneficial ownership report. Companies created or registered after January 1, 2024, have 30 days to file a beneficial ownership report. That 30-day window starts when the company receives notice from the secretary of state or another office that its creation or registration is effective.

What are the penalties for non-compliance?

Businesses risk severe penalties if they fail to submit beneficial ownership information. If a business does not submit the necessary beneficial ownership report or update by the deadline, it will be fined $500 each day, up to a maximum of $10,000.

Intentionally entering false information or committing willful failures are felonies that carry a maximum two-year jail sentence. Penalties for anti-money laundering offenses carry a maximum 10-year prison sentence.

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